2017 Investor Roundtable:General Discussion

[Fallenone]

Visited the store in Chicago. They have 24 S and 10 X on the lot. A few of them are test drives and loaners I think but the majority is wrapped and ready to be picked up.

Chat with employee about 3. Not much new info but he did say options on 3 (he used adaptors, paint, sunroof as examples) will be half the price compared to S/X. I should've asked if this also applies to AP but I was too dumb.

 

[GregRF]

Not to rain on the parade, but we have known for while now that LG Chem can make battery packs at $145/KWh.

The $145/kWh was cell cost, not pack cost. I believe pack costs were ~$230/ kWh and GM are selling the battery for $262/kWh

GM lists the price of the Chevy Bolt EV’s battery pack at $15,734.29 – $262/kWh

 

[RobStark]

I wouldnt be so quick to assume that Tesla will make this a profit center.

How about Tesla becomes a non-profit with no profit centers?

LOL.

 

[DurandalAI]

Visited the store in Chicago. They have 24 S and 10 X on the lot. A few of them are test drives and loaners I think but the majority is wrapped and ready to be picked up.

Chat with employee about 3. Not much new info but he did say options on 3 (he used adaptors, paint, sunroof as examples) will be half the price compared to S/X. I should've asked if this also applies to AP but I was too dumb.

On the topic of AP, I would guess that S & X AP prices will drop in line with the AP prices on the Model 3. The other option is that AP could be rolled into a subscription service, with things like streaming audio (and later video) included in the subscription. That would substantially lower the cost of entry for Model 3 owners. Especially if your subscription is paid for (in the future) by participating in Tesla Mobility.. hmmmmm.

 

[Reciprocity]

How about Tesla becomes a non-profit with no profit centers?

LOL.

I think the idea is to make the cars sticky like the iPhone. Supercharger, music service, Tesla network. All while keeping the price of the car competitve but not cheap. Tesla network will need a lot of cars in the network for it to work as no one would use the app if they can never find a car available. By letting the owner take most of the profits it will be more compelling for owners.

 

[FredTMC]

I largely agree although a beat might add a little fuel to the fire. No guarantees especially with new locations overseas and Model 3 production potentially causing production hiccups but I like the chances for a beat.

Does anyone know if there has been a shutdown this quarter, or have they produced all 13 weeks?

I have no idea on Delivery beat (or not). Difficult to judge

Also, I don't believe the build out for Model 3, is having much impact on existing MS/MX production

 

[RobStark]

By letting the owner take most of the profits it will be more compelling for owners.

If Tesla sells all products and services at cost it will be more compelling for the owners.

 

[scaesare]

A. My preferred language is R.

I like BF:

BF Programming Language

 

[Yggdrasill]

Plans not laws.

Norway may very well start removing BEV exemptions to automotive taxes starting in 2020.

Survey after survey in Norway shows financial considerations far outweigh environmental considerations when buying BEVs.

The idea is to phase out the BEV incentives while at the same time ramping up taxes on polluting cars, thus maintaining the relative advantage of the BEVs. I don't think it's very likely that we do what Denmark or Singapore did - most of the politicians use them as examples of how not to do things.

 

[Reciprocity]

If Tesla sells all products and services at cost it will be more compelling for the owners.

I guess I dont speak sarcasm or I missed something. First, business are in business to make money, but they dont always make money from every service or product they sell. In marketing we have loss leaders that are used to acquire customers and bring them into the eco system. Once they are customers, then its all about putting products into that pipeline to earn a profit. Tesla could sell the cars at a loss and charge for everything else, like fuel and service. Maybe they even thought about that, but in the end it wouldnt work because not allowing home charging would be a death knell and people would figure out how to service the vehicles themselves and Tesla would be out of business. Now fast forward to when there are 100 EVs on the market and people have some real choices. Something like the Tesla network will keep them with Tesla. If Tesla is able to get enough cars into the network fast enough, it would make it very hard for anyone else to do the same. Once you have enough coverage and you are using Autonomous EVs that are maintained by their owners, the costs are to low for anyone else to compete. Tesla may even want to seed some markets with a Tesla owned fleet. Long range and the charging network that is run by Tesla's solar products are another barrier for competitors. If competitors use leafs for example, they will spend to much time charging at L2 chargers. If Tesla decides that they are going to take a profit on this service, which they might, then it opens the doors for competitors to come in with dirt cheap cars. Once enough customer owned Tesla's are displaced due to pricing power, then the network dies because people cant find rides when they need them. People wont wait for a ride, they will move on to the next app. Certainly Tesla will have a service fee built into every ride to pay for software and charging, but I am not sure they will also add additional profit margin on top of that. They certainly could and it would be very profitable, but it could leave them susceptible to competition. Lyft for example has a big GM investment. GM could make Cruise Automation enabled Bolts for the sole purpose of autonomous ride sharing through the Lyft network. That could be enough to crush the idea of a Tesla network that charges a fee on top of what the car owners need to incentive them to put vehicles into the network. Most people will use the cheapest and you wont have enough high end customers who demand a Tesla over a Bolt. I would love for this service to be a slam dunk, but i think its much less of a slam dunk then almost everything else Tesla is trying to do. The only thing I know for sure is that the only way it will work is with Autonomous EVs. Autonomous ICE cars are far to expensive to operate. What could stop Lyft/GM is the charging network. If cars are idle for 5+ hours a day charging in the middle of the of a shift, then they wont be that competitive. Charging overnight is good, but 238 miles wont last a day and charging would take at least 5 hours on currently available charging networks.

 

[DurandalAI]

What could stop Lyft/GM is the charging network. If cars are idle for 5+ hours a day charging in the middle of the of a shift, then they wont be that competitive. Charging overnight is good, but 238 miles wont last a day and charging would take at least 5 hours on currently available charging networks.

You answered it right at the end. The charging network. Currently no charging network has fully autonomous charging available. I honestly don't believe that the other networks will put into place a system that will allow the cars to charge themselves without human intervention until far too late. Tesla doesn't have it in place yet, but we know for Tesla Mobility to work, that they have to be planning based upon the idea, and we've seen the snake charger. (I'm imagining that some simpler solution than the snake will be used, offering x,y,z axis on rails as it would be simpler to create/maintain.) If they swap out a portion of the manual chargers for automated ones at each SC location, they're done. The other providers need a unified and standardized autonomous charging system in order to truly compete. Otherwise these vehicles will be fleet owned, and they'll have to return to "home" where there's a human to plug in the fleet of vehicles that are needing to charge, which necessitates fleet owners to install chargers, man them with a person, etc etc. Certainly possible, but more capital intensive for the fleet operators.

Anyhow, not trying to shoot down your argument, just offering my opinion on how Tesla will have an edge on the charging side.

 

[ValueAnalyst]

Tesla Energy: My DCF assumes only $2B from Powerpack in 2018 with 25% gross margin.

The "super-exponential" growth kicks in during 2020/21, and slows down to exponential growth in 2022, tails off in 2025.

 

[neroden]

Tesla Network comprises about half of the intrinsic value in my DCF.

Then you should cut your DCF in half. "Not an advice."

 

[neroden]

Given these three facts, I don't understand how people project only 10% market share for Tesla... baffling.

There are Chinese companies ramping up fast enough that it will be very hard for Tesla to take more than 25% of the market.

Project Tesla growth rate out until they reach 10% of the world market -- 8 million cars per year -- they're unlikely to manage that before 2024. By *that* year it seems like it's going to be possible for the many Chinese companies to ramp up to take a large share of the market. 10% of the world market seems safe for Tesla, 25% seems possible, more than that seems highly unlikely.

 

[NZ10K]

There are Chinese companies ramping up fast enough that it will be very hard for Tesla to take more than 25% of the market.

Project Tesla growth rate out until they reach 10% of the world market -- 8 million cars per year -- they're unlikely to manage that before 2024. By *that* year it seems like it's going to be possible for the many Chinese companies to ramp up to take a large share of the market. 10% of the world market seems safe for Tesla, 25% seems possible, more than that seems highly unlikely.

No. It won't take that long for Chinese competitors to ramp up so long as Tesla setup factories in China. 2-3 years is enough for them to get all Tesla's technologies.

 

[ValueAnalyst]

There are Chinese companies ramping up fast enough that it will be very hard for Tesla to take more than 25% of the market.

Project Tesla growth rate out until they reach 10% of the world market -- 8 million cars per year -- they're unlikely to manage that before 2024. By *that* year it seems like it's going to be possible for the many Chinese companies to ramp up to take a large share of the market. 10% of the world market seems safe for Tesla, 25% seems possible, more than that seems highly unlikely.

Please specify which Chinese co and link to the source where you see them ramping up quicker than Tesla.

The ones I follow can't come even close.

 

[ValueAnalyst]

Then you should cut your DCF in half. "Not an advice."

I would gladly review a mature argument, but this is not helpful.

 

[larmor]

Here's another reason why energy Independence from the grid is going to be important, hence TE:
https://www.wired.com/story/russian-hackers-attack-ukraine/

 

[ValueAnalyst]

There are Chinese companies ramping up fast enough that it will be very hard for Tesla to take more than 25% of the market.

Project Tesla growth rate out until they reach 10% of the world market -- 8 million cars per year -- they're unlikely to manage that before 2024. By *that* year it seems like it's going to be possible for the many Chinese companies to ramp up to take a large share of the market. 10% of the world market seems safe for Tesla, 25% seems possible, more than that seems highly unlikely.

I expect the replacement cycle to speed up, but this is not in my base case. Even without that, however, 10% of market is 9 million.

So you do not expect Tesla to finish Gigafactories 3, 4, 5, and 6 until 2024? You do not expect Tesla to start to build several Gigafactories in addition to the next four until 2024? Elon has said they can do 6-7 million cars a year with 4 or 5 Gigafactories, which they will have finished by 2021. And I do not see any player, Chinese or not, with plans to outdo Tesla's growth.

Sorry, but you'll have to do better than "disagrees" and one-liners.

 

[DurandalAI]

Here's another reason why energy Independence from the grid is going to be important, hence TE:
https://www.wired.com/story/russian-hackers-attack-ukraine/

Cyber Warfare is becoming more widely reported on in mainstream news, but it's been going on for a while. Some of the lax behavior with some SCADA control systems scares me. I expect to see further disruption in the future, not just in places like eastern europe, but in the U.S. as well. If certain three letter agencies can develop Stuxnet to take down uranium centrifuges, we know that those in the continent of Asia can do similarly.